December Divisional Finance Leadership Forum

December 15, 2016

Finance Competency Framework

Suresh BhatCFO, Haas School of Business

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AgendaI. Objectives & Benefits

II. Demo of Framework / LMS

III. Roll-out Plan

IV. Branding

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Why create a FCF? Why now?

As finance plays an increasingly important role on campus, we need to create a shared understanding of current and future expectations for core financial analyst positions ♦ Augmentation of Career Compass♦ Promote collaboration and

professional development

Accentuate finance critical success factors♦ Leveraging data for decision making♦ Simplifying complex processes♦ Building service-oriented models♦ Storytelling and communicating

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Project Objectives:Develop an integrated tool for finance professionals

Provide training “toolkit” to enable finance professionals to enhance developmental needs

Establish informal community for networking and best practices

The finance function, in collaboration with senior leadership, will play a key role in resolving our financial challenges and

maintaining UCB’s leading reputation.

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“Roadmap”

Mobility

Consistent Lens

Learning and Development

♦ Provide clarity and uniformity on job expectations at each level.

♦ What does it take to develop new skills to be ready to move up when an opportunity becomes available?

What are the benefits?

♦ Encourage internal mobility♦ Recognition of “spiral staircase” concept; moving laterally to

acquire different experiences aids long-term career growth

♦ Create a common standard for recruiting new finance talent

♦ Additive to UCB core competencies

♦ Identify performance gaps and training needs♦ Facilitate creation of developmental plans

(immediate, medium and long-term) within annual performance review

♦ Framework used for development, not assessment

Personal Effectiveness &

Individual Leadership

Management

FP&A Technical / Functional Skills

♦ Diversity & Inclusion♦ Integrity and Ethics♦ Initiative / Problem

Solving♦ Creativity / Innovation♦ Vision / Influence♦ Strategic Thinking / Goal

Setting♦ Communications

♦ Learning & Development

♦ Integrity & Ethics♦ Emotional Control♦ Change Mgmt♦ Relationship Building

Skills♦ Dependability &

Reliability♦ Customer Service

♦ Strategic Focus♦ Operational Focus

♦ Employee Focus♦ Workplace Focus

♦ Project Management♦ Technical Skills♦ Financial Theory

♦ Analytical Skills♦ Functional Finance Comm.

(Listening, Speaking, Writing, Visualization)

Work / Educ. Experience ♦ Required levels of experience / education

Framework Overview / Demo

All J

ob F

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LMS Demo

Launch (DFL Meeting)

Town Hall for Financial Analysts

Emails to People Managers / FAs

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► Introduce framework to all CAO/DFLs

► Demo Framework / LMS

► Value of tool

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► UCB Sr Leader Kickoff

► Background Context

► Panel Discussion ► Development

Spotlight► Q&A► Networking

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Rollout Plan (DRAFT)

► Follow-up on resources / tools

Dec 2016 Feb 2017 March 2017

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Appendices• Timeline• Governance• Evolution of Financial Analysis at UCB

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2015 - 2016

H1 2015 H2 2015 H1 ‘16 (Hiatus) H2 2016 Q416 / Q117

Exec

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• Socialize concept (Q1 ’15)

• Received approval to move forward Q2’ 15)

Guidance, sponsorship and approval

• Steering committee kick-off (April 2015)

• Align on objectives, governance and draft framework

Steering committee formed Rollout to campus

• Meetings to finalize draft (July/Sept ’15)

• Review training inventory (Sept ’15)

Timeline

Steering Committee Meetings

• Working Group Kick-Off (May 2015)

• Discuss tasks and governance (May and June 2015)

• WG meetings to finalize framework (July 2015)

• WG meetings to create inventory o training materials (Aug / Sept 2015)

Working group formed Working Group Meetings Rollout to campus

• Preliminary Draft approved by J. Raymond (Fall 2015)

Prep

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B) • Final Draft approved

by HR (Fall 2016)• Approved to rollout by

R. Rae (Fall 2016)

• Demo final framework and training inventory; discuss rollout plan (Oct 2016)

• Demo final framework and training inventory; discuss rollout plan (Oct 2016)

• DFL (Dec 2016) hosted by R. Rae

• Town hall for all FAs (Q1 2017))

• Email communique to Finance Mgrs & FAs

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Project Management

• Suresh Bhat, Haas CFO (Co-lead)• Jon Bain-Chekhal, Director CBO (Co-Lead)• Jeannine Miles (Lead – Communications and

Change Management)

Executive Sponsors

Rosemarie Rae, CFOJeannine Raymond, Head of HR

Steering Committee

Terrence Ireland (CFO, L&S) Heidi Wagner (CAO, Social Welfare)David Secor (CFO, Athletics) Georgia Giatras, (CAO, Law)Dat Le (CAO, Engineering) Lisa Vanderfin (Director, Accounting)Suzanne Sutton (CAO, Chemistry) Barbara Lane (Assistant Dean, CNR)Stephanie Metz (Director FP&A, CSS) Grace Crvarich (COO, VCRE)

Team Structure (Governance)

Strategic Advisors

• Rich Lau (Director of Compensation & Benefits)• Sheri Showalter (Head of HR, Law)

Working Group

Heidi Hallet (PBO, CBO) Monica Porter (Director FP&A, Haas)Maya Woodson Turman (PBO, CBO) Chris Mount (CFO/CAO, BBEQI)A. de la Rosa (Director, Chemistry) Michael Ferencz (Director, Grad)Amy Robsinson (ED, L&S) Jennifer Chizuk (Manager, L&D)Anil More (Director, Physics) Charet Wynn (FA, CSS)Joe Magliaro (Bus Serv Manager, BioSciences)

1211/15/13 | Lorem Ipsum

We would like to shift the amount of time we spend on transactions/ reporting (building blocks of FP&A) to analytics and decision support through automation

“Process/Operational” Activities Decision Support Activities

• Data gathering & pulling

• Deficit clearing• Fund

management• Monthly reporting

• Completing compliance requests

• New revenue generation• First dollar principle

analytics• Fee pricing optimization• Long range modeling• Cost of services (e.g.,

recharge)

• Degree program economics

• Scenario planning / “what if” analyses

• Rolling forecast• Variance analysis

Today’s State Desired State

Process / Operational

Decision Support

1311/15/13 | Lorem Ipsum

To achieve our aspirational vision, we must evolve the “traditional” financial analysis role

Scorekeeping / Reporting

Strategist♦ Long-term strategic planning / forecasting♦ New revenue generation♦ Resource allocation / capital planning & management♦ Business performance management

Analytical business partner♦ Improved financial modeling / analytics for decision support♦ Scenario planning ♦ Revenue pricing / optimization ♦ “Product” / program economics

Cost leadership♦ Long-term expense management♦ Operational agility and adaptability♦ Elimination of low value activities♦ Understanding of variable, step-function and fixed costs

Operational Support

Cost Management

Revenue Recognition

Delphine RegaliaAssistant Vice Chancellor and Controller,

Office of the CFO

“General” Rule: recognized when an exchange has occurred and not on a cash basis.

• At the time of sale• As services are provided

Business contracts

UC Berkeley entered into a 2-year agreement to provide analysis services to a third party. The services were provided evenly over the period. In scenario A, the payment was received up front. In scenario B, payments were received over time per the agreement, 25% in year 1 and 75% in year 2.

Example 1: basic terms

Yr 1 Yr 2 Total

Revenue recognition – both scenarios $100 $100 $200

Cash scenario A – Upfront payment $200 $- $200

Cash scenario B – Payments over time $50 $150 $200

UC Berkeley signs a 2 yr agreement to:1) provide services over a full 2 year period and 2) deliver fabricated equipment at the end of the period.

The agreement provides for annual payments of $100 over the course of the agreement.

Example 2: complex contract with multiple components

Cash Flows Yr 1 Yr 2 Total

Cash received $100 $100 $200

Revenue Recognition Yr 1 Yr 2 Total

Revenue - services $75 $75 $150

Revenue - equipment $- $50 $50

Total $75 $125 $200

The 2 components require bifurcation and valuation for revenue recognition. Assume the services are valued at $150 and the equipment is valued at $50. Revenue for services are recognized ratably over the period in which rendered. Revenue for the equipment is recognized when delivered, i.e. the time of sale.

“General” Rule: revenues = expenses

• Cost Reimbursable• Scheduled Pay• Fixed Fee

Research contracts & grants

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Cost Reimbursable• In C&G modules, revenue is recorded daily equal to expenses

recorded

Scheduled Pay• Same as Cost Reimbursable

Fixed Fee• In C&G modules, revenue is recorded by milestone

• At year end, an entry is made to record revenue (equal to expenses). This is recorded in a Central Dept ID and reversed on July 1.

Research contracts & grants

For business contracts accountingFinancial Accounting and Controlsgao@berkeley.edu510-642-0031

For research contracts and grants accounting Contracts and Grants Accountingcgaawards@berkeley.edu510-643-4246

Questions

Finance Reform

Rosemarie RaeAssociate Vice Chancellor

Chief Financial Officer

FY18 Simplified Budget Process

Rosemarie RaeAssociate Vice Chancellor

Chief Financial Officer

Strategic planning and decision making is changing

Transitioning from… Transitioning to…

Budget Process Chancellor, EVCP, Budget Office Chancellor, EVCP, Council of Deans, VCs

Decision Making Localized at decanal or VC level with Chancellor and EVCP oversight

• Holistic and collective decision making (Deans and VCs)• Higher degree of Dean authority and responsibility• Heavily influenced by UCOP and legislature• Constrained by finances

Financial Decision Making

• Relationship based• Lower dependence on financial

reporting• Demand driven• Cost containment focus

• Metric based • Higher degree of transparency• Higher dependence on financial reporting• Performance driven• Revenue generation focus

Financial Management Roles

Budget Office:• Process owner• Management of financial trade-

offs• Allocation decision making

Provost, Deans, VCs:• Management of unit trade-offs• Unit target assignments• Unit allocation decision making

Budget Office:• Data support to Provost and Deans• Modeling• Financial Analysis

Higher level of Provost, COD, and VC engagement:• Management of campus trade-offs• Target assignments• Revenue & cost savings strategies• Service level tolerance

Goals

• Minimum DFL effort to provide EVCP/Chancellor/Deans the essentials needed for decision making

• Offer DFLs a choice between using CalPlanning or Excel Budget Template

• Restructure budget hearings

• Deliver one budget target

• Use monthly DFL Forums for budget engagement

• Targeted assistance for revenue generation planning

DFL deliverables

• One page strategic plan (must feature philanthropy and plans for generating revenue)

• Revenue generation budget plan

• Budget via Templates or CalPlanning • Funds will be consolidated• Templates will include Forms A and B

Target

• Staff salary increases and benefits will not be funded from the center

• A budget target of approximately 10% will be assigned to each division to meet a $50M to $65M total campus target

• The target can be met with revenue generation or cost savings

• A committee of DFLs will recommend methodology

Working groupsBudget Template Design & TrainingDFL Lead: Stephanie MetzCFO Office Lead: Kevin Mack

Revenue Generation PlanningDFL Lead: Suzanne SuttonCFO Office Lead: Seija Virtanen

Target SettingDFL Lead: Wanda NietersCFO Office Lead: Maya Woodson Turman

CommunicationsDFL Team: Roia Ferrazares, Terrence Ireland, Sandi Ketchpel, Anna WeidmanCFO Office Lead: Jean Bednarz

Process

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Target Setting TeamRevenue Planning TeamBudget Template TeamCommunication Team

Engagement:

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Monthly DFL Forums

ResponsibilitiesOffice of the CFO DFL

HCM • Design process in coordination with CSS• Develop and populate correction forms • Meet with DFL• Process the changes using a single Service Now Ticket• Prepare reports for DFL’s• Port HCM data into HCP

• Identify department managers for change activities

• Enter changes to the data worksheets• Verify changes

StrategicPlan

• Deliver the template • Work with leadership to populate the strategic plan

Revenue Plan

• Develop template in coordination with the Revenue Generation work group

• Develop and deliver training• Provide targeted consultation for key revenue areas

(concurrent, PDST, SSGPDP, Summer, etc.)• Conduct analysis of revenue proposals

• Work with leadership to develop programmatic revenue and philanthropy strategies

• Complete revenue plan

Budget Template

• Refine template in coordination with the Budget Template work group

• Develop and deliver training• Conduct analysis of budgets• Upload budgets to CalPlanning• Prepare divisional consolidation workbooks

• Work with leadership to develop unit budgets

• Coordinate distribution and completion of templates at L7 level

• Validate budget entry and consolidation reports

Hearings • Package budget, strategic plan, and revenue plan for EVCP/ Chancellor/Deans review

• Identify divisions for deeper review• EVCP will meet with divisions as necessary

• Respond to inquires from EVCP office

Job

Position

REVIEW APPT END DATES

Appt End Date = 12/31/16 or earlier

Terminate job appointment – Yes/No?

If No, then renew appointment

If Yes, inactivate the vacant position –Yes/No?

4,300 submitted across campus to CSS between Oct and November to terminate

Of the 4,300 terminated only 133 positions were inactivated (or 3%) because the majority were students or shared positions that are not usually inactivated

Inactivate the vacant position – Yes/No?

1,054 vacant positions reviewed in BioSci and 1,052 were inactivated

Job Dept, Position Dept, and Level 7 all match?

If no, then what is the correct level 7 DeptID and corresponding L4, L5 or L6?

Approximately 1,000 filled, active positions in BioSci that would require review

REVIEW VACANT POSITIONS REVIEW DEPARTMENTS

HCM clean-up process